flâneur

Hyperbolic discounting — The irrational behavior that might be rational after all · Chris Said

chris-said.io · 1,797 words · saved by 1 readers

When I was in grad school I occasionally overheard people talk about how humans do something called “hyperbolic discounting”. Apparently, hyperbolic discounting was considered irrational under standard economic theory. I recently decided to learn what hyperbolic discounting was all about, so I set out to write this blog post. I have to admit that hyperbolic discounting has been pretty hard for me to understand, but I think I now finally have a good enough handle on it to write about it. Along the way, I learned something interesting: Hyperbolic discounting might be rational after all. If I offered you $50 now or $100 in 6 months, which would you pick? It’s not crazy to choose the $50 now. One reason is that it’s a safer bet. If you had chosen the delayed $100, there’s a risk that I might forget about the deal when the time came to pay [personal note: I wouldn’t], and you would never get your money. Another reason is that if you invest the $50 now, you might be able to make up some of t

Hyperbolic discounting — The irrational behavior that might be rational after all · Chris Said --> Chris Said I am a data scientist at Propel. This blog is mostly about statistics, technology, and science. Hyperbolic discounting — The irrational behavior that might be rational after all 04 Feb 2018 When I was in grad school I occasionally overheard people talk about how humans do something called “hyperbolic discounting”. Apparently, hyperbolic discounting was considered irrational under standard economic theory. I recently decided to learn what hyperbolic discounting was all about, so

related reading